I don\'t know how to do this problem can you help? HaI T1au 5, Customers returne
ID: 2560547 • Letter: I
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I don't know how to do this problem can you help? HaI T1au 5, Customers returned a total of 53 units salable condition and returned to the shelf. 6. The vendor was paid in full for the goods purchased in part 1 7-Checks were received from customers who purchased goods in part 2, All took the 2% 8. A total of 1,600 units were sold during the rest of the month at prices averaging $13, 9. At month-end, management estimated that 10% of the goods sold in parts 4 and 8 10. Also at month-end, management estimated that $344 of this period's credit sales would Required discount that was offered for paying within 10 days Three-quarters of the sales were on credit would be returned as defective. be uncollectible A. Show how each of the transactions would be entered into the accounting systenm B. Prepare an income statement for the month of October assuming that operating C. By what amount would net income have been different if the perpetual LIFO method D. By what amount would net cash flow from operating activities have been different if the the firm uses the perpetual FIFO inventory method expenses (other than warranty expense and doubtful accounts expense) totaled $2,500 and the company's tax rate is 35%. had been used? Prepare a schedule that proves your solution. perpetual LIFO method has been used? Explain your solution. P13-9 ACCOUNTING ERRORS REGARDING OPERATING ACTIVITIES At year-end, the accounting department at Bell-Jones Industries had prepared the f balance sheet and income statement Income statement Balance sheet $1,855,000 792,000 Net sales Service contracts Cost of goods sold Operating expenses: 58,000 215,000 9,000 3,000) 136,000 413,000 (107,800) 79,000 $ 799,200 Cash Accounts receivable Less: Allowance for returns (1,298,500) Allowance for doubtful accounts (537,300) (60,000) (282,000) Merchandise Buildings and equipment Less: Accumulated depreciation Land Total assets Wages Rent Advertising Doubtful accounts Depreciation Warranties Accounts payable Wages payable Warranty obligations Common stock Retained earnings Total liabilities and stockholders' equity $ 108,200 25,000 61,000 300,000 305,000 $799,200 Operating income Interest revenue Income before taxes Provision for taxes Net income (26,800) (55,000) $387,400 1,350 388,750 136,063 252,687Explanation / Answer
Impact on the balance sheet Accounts Debit Credit Assets = Liabilities + Owner's Equity 1) CC + Retained earning Sales Returns $9,000 -9000 Merchandise (9000 x (1 - 30%) $6,300 + 6300 Accounts Receivables $9,000 -$9,000 Cost of Goods Sold $6,300 6300 2) Accounts Payable $60,000 -60000 Merchandise $60,000 -$60,000 3) No Entry The entry is correct and it has included as part of last year’s ending inventory because Goods are purchased at FOB shipping point so the Title to the goods transferred at the shipping point. 4) Warranty Expenses ($75000 - $55000) $20,000 -20000 Warranty Obligations $20,000 20000 5) Service contracts $100,000 -100000 Accounts receivables $100,000 -100000 6) Sales Return $10,300 -10300 Allowance for Returns $10,300 -10300 7) Doubtful accounts Expenses $5,960 -5960 Allowances for doubtful Accounts 5960 -5960 b) Schedule Net Sales ($1,855,000 ($9,000 + $10,300 sales returns)] $1,835,700 Service Contracts ($792,000 $100,000) $692,000 Total Revenue $2,527,700 Less: COGS ($1,298,500 $6,300) $1,292,200 Gross Profit $1,235,500 Less: operating expenses Wages (Given) $537,300 Rent (given) $60,000 Advertising (given) $282,000 Doubtful accounts Expenses $5,960 Depreciation (given) $26,800 Warrenties ($55,000 + $20,000) $75,000 Total operating Expenses $987,060 Operating Income $248,440
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